“The article below is the most realistic I have ever seen re. energy. It has solar and wind combined being about 15% to 25% of global electric energy needs by 2040, with the other 75% or so coming from natural gas, oil, and yes even coal. The author points out that coal was only 5% of the world’s energy supply in 1840 and it took until 1900 for it to be just 50%, and the oil industry started in 1859, but it took more than a century for oil to overtake coal as the world’s largest energy source in the 1960s, and even with that global coal consumption has tripled…

…and the author points out that just a decade ago our experts thought the U.S. would have perpetual shortages of natural gas and yet today we have a more than a hundred-year supply and the U.S. is on track to be one of the worlds largest exporters of liquid natural gas. Also, just 7 years ago (in 2008) the fear of running out of oil was pervasive and yet today U.S. oil production has doubled and there is a worldwide supply glut. Given how wrong these “expert predictions” were about gas and oil supplies, how do we know our “experts” who predict doom and gloom re. global warming (a far more complex subject, I think?) are right? Also, doesn’t this article present a strong buy case for the coal stocks once the Obama administration stops attacking them? Seems to me that we just have to keep working this very long-term path of energy innovation and not panic, as some would have us do.”, Mike Perry

The Power Revolutions

Natural gas, solar power and data-driven efficiency are making big gains, but history shows that the shift away from coal and oil won’t be fast or neat

The Crescent Dunes Solar Energy Project, a 110-megawatt solar thermal power facility, near Tonopah, Nev., June 26, 2014. Officials with the project say they expect it to start generating electricity this October Photo: Jamey Stillings

By Daniel Yergin

Energy innovation and energy “transition” are today’s hot topics. President Barack Obama aims to have 20% of U.S. electricity come from wind and solar by 2030. Presidential candidate Hillary Clinton has gone one better: A few weeks ago, she pledged that, within 10 years of her taking office, there would be enough renewable electricity to power every home in America. That would certainly be a sprint, given that wind and solar now account for less than 6% of our electricity.

Some are more cautious about such prospects. Bill Gates recently committed $2 billion to “breakthrough” energy innovation because he is convinced that current technologies can reduce carbon-dioxide emissions—and the human contribution to climate change—only at costs that he has called “beyond astronomical.”

One thing is certain: Over the next few months, with the approach of December’s big climate-change conference in Paris—more than 190 countries are expected to attend—the discussion will grow more intense over how quickly the planet can move away from coal, oil and natural gas and toward a low-carbon future.

Such energy transitions are nothing new. They have been going on for more than two centuries. They have been transformative and undoubtedly will be again—but if history teaches anything, it is that they don’t happen fast.

In 1824, a young French scientist and engineer named Sadi Carnot published a paper on “the motive force of fire.” His aim was to explain the workings of an amazing half-century-old invention: James Watt’s steam engine. His explanation—the “Carnot cycle”—is still taught to engineers. Carnot was convinced that this new technology was a critical factor in Britain’s defeat of France in the Napoleonic wars, and he wanted to ensure that his countrymen could gain the same technological mastery.

But Carnot also saw in the steam engine “a great revolution” in human civilization—the harnessing of energy on a scale that would transform the world. Indeed, the steam engine set off the first major transition in world energy. Instead of relying on biomass—wood, agricultural residue and waste—as it had done for more than 400,000 years, humanity began to move to coal.

We think of the 19th century as the era of coal, but as the distinguished Canadian energy economist Vaclav Smil has pointed out, coal only reached 5% of world energy supply in 1840, and it didn’t get to 50% until about 1900.

The modern oil industry began in 1859, but it took more than a century for oil to eclipse coal as the world’s No. 1 source. “The most important historical lesson,” Dr. Smil says, is that “energy resources require extended periods of development.”

A no less important lesson is that, even as newer sources overtake older ones, they also overlay them; the older hardly go away. Oil may have overtaken coal as the world’s top energy source in the 1960s, but since then, global coal consumption has tripled.

Previous transitions have occurred because of new technology and applications, changing costs and prices, and concerns about energy security. Today it is climate-change policy that is pushing the transition, seeking to replace lower-cost energy with what is, at least for now, higher-cost energy. The cost gap is currently being closed by a host of subsidies, incentives and regulations and by advances in technology and manufacturing.

Two big innovations are now playing out across this new energy landscape. One of them is renewable: solar energy. The other is conventional: shale gas and shale oil. Both demonstrate what the physicist Steven Koonin, who served in the Obama administration as undersecretary of energy for science, calls the “Rule of Energy Inertia.”

As he explains, “The energy system evolves much more slowly than other technology-dependent sectors” because of its “sheer scale…and its ubiquity throughout our society.” Also, he adds, because of “the amount of capital that is invested, the fact that infrastructure like power plants lasts so long, and the interconnectedness and interdependence of the whole system.”

Both shale and solar provide proof for Dr. Koonin’s rule. The shale revolution might seem to have burst on the energy scene almost overnight, but it was actually a long time in the making. It largely began as the conviction of one man, a Houston natural-gas producer named George P. Mitchell. In the early 1980s, Mr. Mitchell became convinced that commercial natural gas could be produced from dense shale rock. Hardly anyone believed him.

It wasn’t until the late 1990s and early 2000s that the concept was proved with the successful yoking together of hydraulic fracturing (more famously known as fracking) and horizontal drilling, whose development went back to the 1980s.

Instead of the permanent shortage of natural gas that was assumed a decade ago, it is now thought that the U.S. holds a supply that will last more than a century. Indeed, the U.S. is on track to become one of the world’s largest exporters of liquefied natural gas.

The Ivanpah Solar Electric Generating System in the Mojave Desert in California in March 2014. I Photo: Jacob Kepler/Bloomberg News

The same new techniques have been applied to oil as to shale, with transformative results. In 2008, the fear of running out of oil was pervasive. In 2015, just seven years later, U.S. oil production has almost doubled. This surge, combined with increasing Saudi and Iraqi supply, does much to explain the current oil-price collapse.

The roots of the solar revolution go back even further, to a paper that Albert Einstein wrote in 1905 on the “photoelectric effect,” for which he was awarded the Nobel Prize. It took more than a half-century for Einstein’s theoretical insight to be applied. Functioning solar cells were hastily developed in the late 1950s to supply reliable electricity for U.S. satellites in the space race with the Soviet Union, but the cells were fantastically expensive.

If solar energy was to become a practical terrestrial source of electricity, the cells needed to be cheaper—much cheaper. One of the pioneers in that effort was a chemist named Peter Varadi. In 1973, he and fellow Hungarian refugee Joseph Lindmayer launched a company called Solarex in Rockville, Md.

When they started, there was hardly a market for photovoltaic cells. Then customers began to emerge, mainly for applications in remote locations, off the grid. The U.S. Coast Guard bought solar cells to power its buoys. The oil industry did the same for offshore platforms. Illicit marijuana producers needed a lot of power for their greenhouses but also wanted to avoid getting fingered by the police because of oversize electric bills.

But it seemed like the solar business would never reach sufficient scale. Solarex was profitable but short of capital, and Dr. Varadi and Dr. Lindmayer ended up selling it in 1983. Exxon, the other early entrant in the field, got out in 1984 because it couldn’t see a significant market ahead in any reasonable time frame. By the beginning of the 1990s, the Economist was calling the solar industry “a commercial graveyard for ecologically minded dreamers.” For struggling solar (and wind) entrepreneurs, the decade became known as the “valley of death.”

But then, at the beginning of this century, solar came back to life. The reason was Germany. In pursuit of a low-carbon future, the country launched its Energiewende (energy transition), which provided rich subsidies for renewable electricity.

A fractionator tower is lifted in place at a natural gas processing complex in Mont Belvieu, Texas, on March 8, 2013. Photo: Erich Schlegel/Corbis

The biggest beneficiary of Germany’s solar policy turned out to be not German industry, as had been expected, but China. Chinese companies rapidly built up low-cost manufacturing facilities and captured the German market, driving Q-Cells, the leading German company, into bankruptcy.

The resulting overcapacity of Chinese factories pushed down costs, as did the falling price of silicon, the raw material that goes into solar cells. As a result, the cost of a solar cell has fallen by as much as 85% since 2006. Installation costs have also come down, though not to the same extent.

With declining costs and expanding capacity, and with government subsidies and regulations, photovoltaics have taken off. Global sales of solar modules in 2014 were 70 times greater than in 2003. By the end of last year, the installed capacity of photovoltaics added up to nearly 200 gigawatts. In terms of actual generation, that matches the output of about 40 one-gigawatt nuclear reactors, since a nuclear plant produces power steadily while the output of solar panels requires daylight and varies from sunny days to cloudy ones.

Solar is compelling in hot, sunny regions. Even there, it needs backup generation for times when it cannot operate. In many other locations, however, solar isn’t competitive without subsidies and incentives of one kind or another. But a great deal of effort is going into technological innovation aimed at improving the efficiency of cells and lowering installation costs. And new financing mechanisms are emerging to facilitate adoption of the technology.

“Solar is growing fantastically,” says Dr. Varadi, who chronicles solar’s rise in his new book, “Sun Above the Horizon.” “Something like this requires time. Shale oil and shale gas had a ready market. When we started, we had no market at all, zero. And the industry had to get to mass production to bring down costs.”

Over the last six years, the contribution of photovoltaic solar to global electricity has increased tenfold. It is now up to 1% of world electricity, which is about 0.2% of total world energy. Scenarios developed by IHS (my own firm) show it getting up to 4% to 9% of total global electricity by 2040.

Solar is growing rapidly in the U.S. and could account for nearly 1% of total electric generation by the end of the year. The amount of electricity from the other “new” renewable—wind—is currently much larger, almost 5% of total U.S. electricity.

Like solar, modern wind power got its start during the energy crisis of the 1970s, which led to the “California wind rush” of the early 1980s. The industry was born from the marriage of sturdy Danish wind turbines with California tax credits and energy policies.

Today, wind is on a growth path. In the past few years, manufacturing improvements and new designs have brought down costs, but wind, like solar, still needs incentives and subsidies to be competitive in most places. Wind now generates 3.5% of world electricity. According to scenarios developed by IHS, it could reach 9% to 13% of the global total by 2040.

What could speed up solar and wind? The development of batteries that can store renewable electricity for those times when the sun isn’t shining or the wind isn’t blowing. A lot of investment and effort is going into meeting the challenge. Meanwhile, innovation with batteries is already having an impact on transportation with the emergence of the electric car.

Here, too, there is a very long provenance. More than a century ago, Thomas Edison poured a substantial amount of his own money into trying to launch an electric car. He was absolutely convinced, he said, that “more electricity will be sold for electric vehicles than light.” But in that race, he lost out to Henry Ford and his Model T.

The introduction of the Tesla Model S in 2012 was a very impressive engineering and marketing feat. But the rechargeable lithium-ion battery that powers the car was originally invented in an Exxon laboratory during the energy crisis of the 1970s, when it was thought that oil was about to run out.

The purpose, as M. Stanley Whittingham, the lead scientist on the project, wrote in the journal Science in 1976, was to develop batteries “for electric vehicle propulsion and for the storage of off-peak and solar power.” But oil prices went down, and the “electrics” never arrived.

Lithium batteries languished commercially until Sony began to use the technology in the 1990s to power video cameras, and then lithium became ubiquitous for a whole host of small portable products, including PCs and smartphones. Tesla has brought the lithium battery full circle, back to its original purpose of “electric vehicle propulsion.”

Another frontier for energy innovation gets less attention because it is less dramatic and certainly less visual: using energy more efficiently and thus using less of it. But the potential in this realm is very great.

The U.S. is more than 2½ times more energy efficient today than it was in the 1970s, when oil crises catapulted energy to the forefront of national politics. But there is still a great deal of slack in the system. By combining information technology, the Internet, and sophisticated monitoring and control tools, large buildings (for instance) can reduce their electricity consumption by 30% or more.

Dr. Koonin, who is now at New York University, is working on these applications. His current research is in “urban informatics”—sensing, collecting and analyzing the enormous amount of “big data” generated by city life.

“One of the things you want to do in a city is make it more efficient, whether in delivery of services, the flow of traffic, picking up trash or energy use in buildings. If you want to optimize, you need to know what is happening at a high level of granularity in terms of time and space. What’s happening with traffic on 52nd Street right now? Or what is the load on the grid right now?”

What innovation will power the next revolution in human civilization? It may well be something, as Bill Gates suggests, that we can’t see clearly now. But when the breakthrough occurs, the chances are that it will have been 20, 30 or even 40 years in the making. Or maybe longer.

Dr. Yergin is the author of “The Quest: Energy, Security and the Remaking of the Modern World” and “The Prize,” for which he received the Pulitzer Prize. He is vice chairman of IHS, a research and information company.